Wealthy parents influence their children’s wealth directly – such as through inheritances or gifts – and indirectly, through family and environmental factors. This column compares the wealth positions of parents in the Netherlands in 1992 and their children in 2022. Children with wealthier parents consistently attain higher wealth rankings compared to their peers, especially among families in the top 1% of the wealth distribution. This correlation between parental and children’s wealth has strengthened over the last 20 years, particularly at the top of the wealth distribution.
The opportunities that children have are partly determined by their family and the environment in which they grow up. Unequal opportunities for children can arise from differences in the financial resources of parents. Hällsten and Thaning (2018) show parental wealth is the most important variable in predicting a child’s wealth later in life. Moreover, parental wealth influences the intergenerational transmission of income, education, and income sources.
In the Netherlands, the wealth disparity between households is substantial. In 2022, the top 0.01% of households possessed on average about €62 million in net assets, while the average household possessed roughly €135,000 (Hamelink et al. 2024). The net assets of people living in a rental home were on average only €3,500 (CBS, 2024a).
Since wealth disparities are large and persistent (Hamelink et al. 2024) and relatively easily transferred from one generation to the next, parental financial assets can have a significant impact on the opportunities children have in their lives. Wealthy parents have the capacity to invest in their children’s future by offering financial gifts, paying for education, arranging tutoring, or helping with skills development. As these children – those born with the proverbial ‘silver spoon in their mouths’ – enter adulthood, they can leverage these resources and skills to invest in their own future and accumulate their own wealth.
In a recent paper (Schulenberg et al. 2025), we compare the wealth positions (in percentiles) of parents in the Netherlands in 1992 with those of their children in 2022, at roughly the age of 40. At that age, most of the children have not yet received an inheritance. Children from wealthier parents consistently attain higher wealth rankings compared to their peers (Figure 1), with the strongest correlations observed among families at the top 1% of the wealth distribution. If parents ranked 10 percentiles higher in the wealth distribution in 1992, their children rank, on average, 3.2 percentiles higher compared to their peers in 2022.
Figure 1 Correlation of wealth position between parents and children around the age of 40
The correlation is somewhat larger in the Netherlands than in Australia and Norway (Siminski and Yu 2022, Fagereng et al. 2021), but smaller than in Sweden and the US (Adermon et al. 2018, Pfeffer and Killewald 2018).
The strongest link between parental wealth and children’s wealth is observed at the very top of the distribution. Children whose parents are in the top 1% of the wealth distribution typically rank in the 82nd wealth percentile themselves, while children from parents in the top 0.01% rank in the 96th percentile on average. If both parents and grandparents are among the top 1% wealthiest in their cohort, the probability of the child also achieving this high position increases even further. For children whose parents rank in the bottom 20% of the wealth distribution, the intergenerational wealth correlation is weaker. Three-quarters of those children succeed in moving into the top 80% by the age of 40.
Between 2006 and 2022, the correlation between parental and children’s wealth positions increases, particularly at the top of the wealth distribution in the Netherlands (Figure 2). Children of parents in the top 1% ranked, on average, 7 percentiles higher in 2022 than in 2006. At the lower end of distribution, upward mobility has become slightly less common. Children of parents in the bottom 10% ranked 2 percentiles lower in 2022 compared to 2006.
Figure 2 Evolution from 2006 to 2022 of the correlation between parents’ and children’s wealth positions at the top 5%
Social background significantly influences wealth inequality
Social background has a profound effect on wealth inequality. We use sibling correlations to distinguish the influence of social environment – primarily in the family context – from individual factors without the need to specify all contributing elements. A high sibling correlation indicates that a significant part of the variation in wealth within a population can be attributed to shared family and environmental characteristics, whereas a low sibling correlation suggests that a large share of the variation is due to individual factors.
About one-third of the differences in wealth positions can be explained by family and environmental factors. These may include parental characteristics, the neighbourhood where someone grew up, the schools they attended, extended family, and genetic factors. The remaining two-thirds of wealth differences are due to factors not shared by siblings. These are primarily individual characteristics, choices, luck or misfortune, but also differences in parental treatment, non-shared characteristics and environments (such as attending different schools), and genetic variations between siblings.
Drivers of intergenerational wealth transmission
Parents transmit their wealth position to their children through direct and indirect channels, which are often intertwined. Direct transfers include providing initial capital during early adulthood, giving financial gifts, and assisting with home purchases. Later in life, inheritances further strengthen this correlation in wealth positions. Indirect transfers occur when parents invest in their children’s human capital – for instance, by supporting educational opportunities and skill development.
According to our data, parental wealth in 1992 and the development of parental housing assets between 1992 and 2022 are indeed strong predictors of children’s wealth position, especially for the middle class in the Netherlands. The 1992 wealth position reflects the ability of parents to support their children during childhood. The development of housing assets measures the financial resources accumulated since 1992. It is important to emphasise that the correlation between the wealth positions of parents and children is not primarily driven by inheritances, as the study compares wealth positions of parents and children around age 40, before the latter have received significant inheritances.
Children from less affluent families have fewer financial opportunities than children from affluent families. Having wealthy parents is an advantage particularly when parents are among the wealthiest. This intergenerational wealth correlation has increased over the past 16 years and may increase even more in the future. Hamelink et al. (2024) show that wealth inequality has only increased slightly since 2006, but the low intragenerational wealth mobility among the wealthiest and increasing importance of capital income in the economy may contribute to larger wealth inequality in the future. As a result, children’s financial opportunities may increasingly diverge based on their family environment, creating a self-reinforcing effect.
Discussion
It can be debated whether the increasing correlation in wealth positions is socially desirable. If some children cannot reach their full potential due to unequal opportunities, this is detrimental not only to these children but also to society, as it may lead to slower economic growth and more people falling into poverty or debt. On the other hand, most parents wish to support their children as much as possible. They aspire to pass on their wealth – either directly or indirectly – without facing too many restrictions. Therefore, it becomes a political matter to decide whether the unequal financial opportunities justify policy interventions. If that is deemed desirable, various policy directions can be considered such as stimulating or subsidising transfers to those who are less well off, stimulating education opportunities for less affluent families, and raising the living standards of less wealthy families. Raising taxes on gifts and inheritances has only a limited effect on the unequal opportunities because these inequalities already existed before these possible transfers.
Source : VOXeu
